How CPG companies can adapt to the New Normal
Manufacturers of consumer-packaged goods (CPG) are finding themselves in the midst of a historic transformation.
The COVID experience and the heightened environmental awareness of consumers and lawmakers are changing the game for CPGs. You can add diversity and multiple ideological standpoints to the mix.
At the heart of these impactful trends lies an unsettling unpredictability that has been coined “The New Normal”.
The New Normal adds a new layer of complexity for CPG companies, but also an opportunity to thrive. CPGs have a huge responsibility in addressing consumer concerns and expectations, and successfully doing so can earn them valuable consumer loyalty.
The Consumer Goods Forum (CGF) is therefore aptly launching the Global Summit 2022 under the theme “From Resilience to Reinvention: Responsible Growth in the New Era.”
Let’s recap some of the game-changing trends:
According to the CGF, 70% of consumers are interested in transparency about products. Yet, many companies are hesitant to share their data due to not having an open culture that is based on having trusted data.
With transparency, CPGs can build consumer trust and align around a meaningful purpose. In our environment where consumers expect more from companies and product brands than ever before, the impact of transparency can be transformative. Manufacturers and retailers (collaboratively) build loyalty, accountability and trust by providing data transparency from source to final purchase, empowering their customers to make informed purchase decisions.
Digital commerce has been accelerated by the pandemic with many first-time digital shoppers that have learnt to appreciate the convenience of online commerce. For CPGs this means that many of them have enhanced their strategic focus on selling direct to consumers, so they now have two very different channels to maintain: traditional distributors/retailers and, in addition, private consumers that have a whole different set of expectations.
As part of the direct-to-consumer strategy, CPGs are expanding their digital presence and becoming omnichannel because they need to be present at the consumer touchpoints, such as social media apps; and consumers expect a consistent experience across channels. For example, when consumers see a product on Facebook, they want to know where it’s available, what others think of it and which other products might be good alternatives.
Sustainability is big business
However, being customer centric is not just about offering convenience. What we see on the horizon is that CPG companies are considering sustainability data to be just as important as their product and supplier information. The reason is simple: sustainability and environmental footprints matter to consumers.
The strategic focus on sustainability has grown in the past two years. About two thirds of our customers in Europe have stated their clear focus on sustainability goals and priorities. And we know for a fact that companies globally are investing in sustainability strategies not just because of the laws coming into play but also because these priorities are helping our customers generate more revenue and growth.
Concerns for the environment has fostered concepts like circular economy and reverse logistics to reuse and extend the lifetime of products as much as possible in an effort to reduce waste.
As an example of how some of our CPG customers are investing in sustainability can be seen in how they utilize packaging data to support a circular economy. Bar codes, QR codes, 2D codes, RFIDs can accelerate the recycle process by transparently communicating what kind of chemicals and materials have been used and how to dispose and reuse the packaging.
Packaging information used to be just about shape and size. But with new demands, new data sets need to be managed. Some refer to this as the attribute explosion.
Obviously, regulatory authorities demand transparency, too, not just of your data but even of data processes – how data is obtained, who has access, and with whom it’s being shared. Being able to share that information can in itself be a competitive factor.
Data needs to be governed
Before jumping to technology fixes, the CPG industry needs to review its data policies in the light of the New Normal, i.e., the confirmed guidance on how you acquire, manage and share data.
Building transparency governance rules into your data policies can help you create a culture of data transparency, which is the single most important goal for CPGs to thrive in this state of market upheaval of unpredictability.
Data transparency can help you solve a whole array of data needs that are tied to the New Normal:
- Customers are looking for clear indications on the sustainability impact of their purchase, from product selection to delivery alternatives.
- Minimise online returns with more (useful) product information, customer reviews, imagery, accurate sizing features, etc.
- Use location data to comply with emission reduction initiatives and support your consumers’ shopping patterns.
- Leverage information from not just suppliers but also sub-suppliers – the source of every button and minute material detail counts in achieving end-to-end transparency.
All these initiatives are fuelled by accurate and well-governed data.
Transparency doesn’t mean that you need to lay out all your data in front of the public. It means you have the choice to share relevant sets of trusted data with your own lines-of-business, with partners, regulatory authorities and customers.
You need to see data transparency as the foundation of not just sustainability, but also of better customer experiences and better collaboration. Accuracy is good, but experienced accuracy is even better because this ensures both your customers and business partners of the validity of your data.
As a large enterprise, you don’t want to waste time debating validity and accuracy of data. Instead, you want every stakeholder to be drawing from the same source of truth.